The onshoring of battery manufacturing for electric vehicles (EVs) in the United States has seen significant growth, fueled by government incentives and automakers’ desire to reduce reliance on China. In 2019, only two battery factories were operating in the U.S., but today there are about 34 either planned, under construction, or operational. This shift began during the COVID-19 pandemic but accelerated with the signing of President Joe Biden’s Inflation Reduction Act (IRA) in 2022. The IRA offers incentives for automakers and consumers to produce domestically and aims to make 50% of new vehicle sales electric or hybrid by 2030.
Under the IRA, vehicles can qualify for the full $7,500 EV tax credit if they meet certain battery sourcing and production guidelines. This requirement includes producing or assembling 60% of the value of battery components in North America by 2024, increasing to 100% by 2029. Additionally, 50% of the value of critical materials must be sourced from the U.S. or a free trade agreement country in 2024, with increasing percentages in subsequent years.
To take advantage of these incentives, automakers and battery manufacturers have invested around $112 billion in building domestic cell and module manufacturing facilities. If each factory reaches maximum capacity, they promise to deliver an annual capacity of close to 1,200 gigawatt-hours before 2030, enough batteries for approximately 18 million EVs.
Several automakers have made significant investments in battery production in the U.S. For example, BMW plans to build a battery assembly facility in South Carolina and a battery cell plant in Michigan. Daimler Truck and Paccar have partnered with Accelera and EVE Energy to build a battery cell production plant in Mississippi. Ford has created a joint venture with SK On to build three battery plants in Kentucky and Tennessee. General Motors has established joint ventures with LG Chem and Samsung SDI to build battery plants, as well as a prototyping facility with SolidEnergy Systems. Honda has a joint venture with LG Energy Solutions for battery production in Ohio. Hyundai has partnered with SK On and LG Energy Solution for battery plants in Georgia, Alabama, and Michigan. Mercedes-Benz opened a battery plant in Alabama and is working with Sila for next-gen battery materials. Stellantis has joint ventures with Samsung SDI and LG Energy Solution for battery facilities in Indiana and Ontario, Canada. Tesla has its Gigafactory in Nevada and plans to expand it, as well as build a lithium refinery in Texas. Toyota is building a battery plant in North Carolina and works with LG Energy Solution for battery production in Michigan. Volkswagen has set up a separate battery company, PowerCo SE, with cell factories in Germany, Spain, and Canada. Volvo has a battery assembly factory in South Carolina but has not disclosed additional plans for battery production.
Battery manufacturers are also investing in the U.S. AESC, Gotion, Kore Power, LG Energy Solution, Northvolt, Our Next Energy, Panasonic, and SK Battery America are among the companies building battery manufacturing facilities across several states.
Overall, the onshoring of battery manufacturing in the U.S. is driven by government incentives and automakers’ desire to reduce reliance on China for batteries. This trend is expected to continue as the EV market grows and the demand for domestic battery production increases.
